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Emergency Room Diversions: A Symptom of Hospitals Under Stress

mergency room (ER) diversions—when ambulances are redirected from one hospital
emergency room to another—are becoming common in communities across
the country, raising concern that critically ill patients are increasingly confronting
obstacles to timely medical care. Although hospitals have long diverted patients
during the winter flu season, recent site visits conducted by the Center for Studying
Health System Change (HSC) reveal that ER overflows are now a year-round
problem. As this Issue Brief describes, difficulty obtaining emergency services may
be just the most visible evidence of deeper problems facing many hospitals as they
struggle to meet growing demand for services at a time of increasing capacity
constraints.

The ER in Crisis

n average, two hospitals a day in Boston closed emergency
rooms to ambulances this year, sending patients to other facilities. Boston is
not alone in frequent closure of ERs. Last year, the Cleveland Clinic Hospital
reportedly was closed to ambulance patients an average of nearly 12 hours a day.
Syracuse hospitals do not have the capacity to admit ER patients on an ongoing
basis, so they regularly rotate times when they are closed to new patients. Such
closure and diversion programs have occurred more frequently over the past two
years, according to findings from HSCs 2000-2001 site visits to 12 nationally
representative communities.

ERs are the main entry point into
inpatient settings for people requiring
nonelective acute care. In addition,
many patients with less serious medical problems seek treatment in ERs
because they have difficulty getting
care elsewhere. Under federal law,
patients who walk into an ER cannot
be turned away. However, hospitals
can exercise more control over patients
who arrive by ambulance. When
hospitals lack capacity to provide
emergency care for patients requiring
treatment or admission, they commonly
divert ambulances to other hospitals.

Nationally, the number of ER visits increased by 15 percent between 1990 and 1999,
according to the American Hospital Association. 1
Many hospitals in HSCs 12 study sites also report marked rises in ER use, with
notable increases occurring in Boston, Cleveland, Greenville and Phoenix.

As ER overcrowding has become
more prevalent, and hospitals in any
given community experience ER overload simultaneously, serious threats to
patient care emerge. Patients are faced
with longer waits in the ER to receive
necessary services, and those arriving
by ambulance frequently are required
to travel farther to receive medical
attention. As discussed below, recent
ER overflows stem from both demand-and
supply-side problems: increased
patient demand for ER services and
increasingly constrained supply.

Increased Demand for ER Services

stricter enforcement of the federal
Emergency Medical Treatment and Labor
Act (EMTALA); and

more patients without insurance seeking
care in the ER.

Looser Utilization Management by HMOs. As HMO enrollment grew during the
mid-1990s, and plans gained greater leverage over utilization patterns, use of
ER services declined. Recently, however, HMOs have been reporting double-digit
increases in ER service use. Most attribute this growth to less restrictive management
practices-a response to the consumer backlash against managed care and less rigid
interpretations of what constitutes a medical emergency, particularly under prudent
layperson laws in more than 40 states.

It also appears that HMO enrollees
increasingly are turning to emergency
rooms for less serious medical problems
because they are unable to get timely access
to primary care physicians (PCPs). Indeed,
PCPs paid by capitation have less incentive
to see patients needing urgent care than to
refer them to the ER. In addition, changes
in HMO structure to accommodate consumer
demand for less restrictive health
insurance products have contributed to
the increased demand for emergency services.
For example, when Bostons Harvard
Pilgrim Health Plan departed from a traditional
staff model, its urgent care centers
were scaled back significantly, increasing
pressure on the communitys ERs.

Stricter Enforcement of EMTALA. With new funding authorized under the Health
Insurance Portability and Accountability Act (HIPAA) of 1996, the Office of the
Inspector General (OIG) at the U.S. Department of Health and Human Services strengthened
enforcement of EMTALA. The 1986 federal law requires all hospitals that receive
Medicare reimbursement-the vast majority of hospitals in the country-to provide
screening for an emergency condition, necessary stabilizing treatment and appropriate
transfers for patients, regardless of their ability to pay. In 1998, the OIG issued
a special advisory bulletin clarifying implications of the law and stepped-up
enforcement. This move put the spotlight on hospitals obligation to provide emergency
care, including screening the patient, providing stabilizing treatment and, if
necessary, admitting. In Phoenix, many downtown hospitals attributed increased
provision of ER services primarily to greater focus on EMTALA compliance.

Increased Demand from the Uninsured. Rising numbers of people without health
insurance have increased pressure on ERs. Despite a small decline in uninsurance
in 1999, the number of people without insurance increased by almost 10 million
during the 1990s,2 increasing demand for care in emergency
rooms, which commonly function as the uninsureds usual source of care.

Supply-Side Constraints

ressure on emergency rooms also stems from supply-side problems.
In many communities, the number of ERs has decreased because of hospital closures
and mergers, leaving fewer facilities to respond to growing demand. Between 1994
and 1999, the number of ERs across the country decreased by 8 percent (see
Table 1).

In addition, newly developing inpatient capacity constraints have compounded ER
supply problems. Downsizing and reconfiguration of hospitals inpatient capacity
have led to delays in admitting patients from the ER. At the same time, there
are fewer discharge options because of reduced investment in skilled nursing facilities
(SNFs) and home health services, adding to the bottleneck in inpatient units and,
consequently, ER overload. Finally, a severe nursing shortage has contributed
to hospital capacity constraints (see box).

Downsizing. Anticipating lower utilization under managed care and declining
reimbursement from private payers and Medicare, many hospitals significantly reduced
inpatient capacity over the past several years. To "right-size" for expected changes
in demand and payment, hospitals mothballed beds by not staffing them, and they
closed less profitable units. Nationally, the number of medical/surgical beds
declined by 18 percent between 1994 and 1999, and the number of intensive care
unit (ICU) beds declined by almost 3 percent. Certain communities experienced
even more pronounced declines. Over the same period, the number of medical/surgical
beds in Boston and Cleveland dropped 29 percent and 21 percent, respectively.

Sometimes, less profitable services were
converted to highly specialized units, such
as cardiovascular care or cancer centers,
that promised to boost revenue. Yet, as
more beds were dedicated to these specialized
units, hospitals had less operating
flexibility during periods of peak demand.
Moreover, the overall reductions in inpatient
capacity left hospitals with fewer beds
to accommodate admissions from the ER.

At the same time, demand for inpatient
care remained stronger than expected. A
combination of managed cares success in
shifting patients with less acute problems
to outpatient settings and technology
improvements left hospitals with sicker
patients requiring more intensive care.
This occurred at a time when many hospitals
aggressively pursued increased inpatient
business to attract revenue to offset
declining reimbursement. The growing
popularity of insurance products allowing
consumers greater freedom to choose
providers contributed to this strategy of
vying for patients. However, inpatient volume increased beyond expectations and,
coupled with significant downsizing, has
resulted in serious capacity constraints in
many hospitals inpatient units.

Reduced Discharge Options. Shortages of SNFs and home health services that
facilitate early discharge from hospitals have compounded inpatient capacity problems.
In the past two years, many SNF and home health providers have gone out of business
or filed for bankruptcy, including several of the largest for-profit companies.
At the same time, changes in Medicare reimbursement under the Balanced Budget
Act (BBA) of 1997 for SNFs and home health left hospitals increasingly wary of
pursuing opportunities to provide these services. In Phoenix, for example, one
hospital closed two hospital-based SNFs and gave up its home care business, reportedly
largely as a result of BBA reimbursement changes.

The OIG has monitored changes in the SNF and home health industries, concluding
that sufficient capacity remains to serve Medicare beneficiaries. However, hospitals
contend that reduced investment in home health and SNFs has resulted in fewer
discharge options overall, adding to the bottleneck in inpatient units.

Table 1
Change in Hospital Capacity, 1994-1999

1994

1999

PERCENT CHANGE
1994-1999

EMERGENCY DEPARTMENTS

4,547

4,177

-8.1%

MEDICAL/SURGICAL BEDS

533,848

439,426

-17.7

ICU BEDS

72,229

70,215

-2.8

SPECIAL CARE BEDS*

15,373

14,848

-3.4

TOTAL INPATIENT BEDS**

621,450

524,489

-15.6

*Burn care beds and other special care beds
intended for care that is less intensive than that provided in an ICU and
more intensive than that provided in an acute area.
**Total of medical/surgical beds, ICU beds and special care beds. Source: American Hospital Association, 1994 and 1999

Hospitals Responses to ER Overcrowding

o address the most pressing problems, hospitals in many communities
have developed coordinated diversion programs to ensure patients maintain reasonable
access to care. Some have moved to expand ER capacity. For example, one hospital
system in Greenville has led community efforts to alleviate capacity pressures
by expanding ERs in other local hospitals with lower occupancy rates.

Others have taken steps to address
inpatient capacity constraints by reopening
licensed beds. In Boston, Massachusetts
General Hospital (MGH) and Brigham
and Womens Hospital have reopened
about 300 beds, including most of the
beds closed during the mid-1990s as a
result of cost-reductions. In addition,
MGH recently added 22 nursing positions
and two attending physician slots
to increase emergency room capacity.

Many hospitals have tried to improve
recruitment and retention of permanent
nursing staff, while bolstering rosters with
temporary staff to the extent possible.
Another way that hospitals are dealing with
the nursing shortage is by reassigning nurses
from outpatient clinics to inpatient units.

Hospitals also are focusing on the bottle-neck
problem by improving the efficiency
with which patients are discharged. One
approach is to free up beds by discharging
patients earlier in the day. Many have tried to
decrease lengths of stay by moving patients
to extended care settings, when these options
are available in the community. As a more
long-term approach, many hospitals hope
to accelerate patient discharges through
increased reliance on clinical guidelines to
standardize treatment plans and on hospitalists-
physicians who specialize in managing
patients hospital stays.

Finally, some hospitals have turned to more immediate fixes to inpatient capacity
constraints, such as postponing elective admissions. ER physicians in Phoenix
advocated this approach recently, when ER overcrowding became unusually severe.

Implications

lthough excess capacity has long been considered a major problem
for U.S. hospitals, overcrowding in the ER-and the role that constrained inpatient
capacity plays-suggests a significant change is occurring in the hospital environment.
In fact, after a decade of hospitals downsizing and reducing operating costs,
local health care systems have been left with little slack to accommodate unforeseen
trends in patient volume.

Stopgap measures to address ER overflows, such as diverting ambulances to alternate
facilities or requiring patients to delay elective surgery, may help to reduce
sporadic strains on capacity, but they focus on only the most immediate problems.
Numerous factors underlying the strain on ERs, such as the rising number of uninsured,
the declining investment in home health and SNFs and the nursing shortage, may
require policy attention.

Moreover, what these stopgap measures
do not address is the erosion of emergency
stand-ready capacity that has occurred in
response to converging market forces and
policy changes of the past decade. It is this
stand-ready capacity that makes hospitals-
and ERs in particular-such vital, yet
expensive facilities to maintain. Looking
forward, policy makers will need to assess
whether market-driven adjustments to the
current mismatch of supply and demand
adequately address this problem or
whether maintaining timely access to
medical care for the uninsured and insured
alike requires other steps.

A Nursing Shortage

nursing shortage—which has become severe in many communities—complicates
hospitals capacity problems by limiting their ability to staff existing beds, particularly
those in critical care units. Although nursing shortages tend to be cyclical, hospitals
today are more vulnerable to the vicissitudes of nursing supply because of operational
changes over the past 10 years. To reduce fixed costs and accommodate lower inpatient
utilization expected under managed care, many hospitals downsized nursing
staff, retaining a smaller permanent core staff and supplementing with part-time or
temporary nurses to cover fluctuations in patient census.

However, hospitals have faced serious obstacles to recruiting and retaining nurses,
in part because of the proliferation of other opportunities for them in the managed
care and pharmaceutical industries. In addition, the nursing labor pool has been
shrinking because of a decline in nursing school enrollment and an increase in the
number of nurses retiring. As a result, while demand for inpatient care remains
strong, many hospitals cannot hire enough nurses to keep existing beds in operation.

About HSC Site Visits

SC conducts site visits every two years to 12 communities:
Boston, Mass.; Cleveland, Ohio; Greenville, S.C.; Indianapolis, Ind.; Lansing,
Mich.; Little Rock, Ark.; Miami, Fla.; Northern New Jersey; Orange County, Calif.;
Phoenix, Ariz.; Seattle, Wash.; and Syracuse, N.Y. Researchers conduct intensive
interviews with leaders of local hospitals, health plans, physician organizations
and representatives of key employers and policy makers to explore how the health
system is changing. HSCs third round of visits was conducted in 2000- 2001 in
collaboration with researchers from Mathematica Policy Research, Inc., the University
of Washington and individuals from selected academic institutions.